Mississippi Supreme Court rules in key Katrina wind vs. water case

JACKSON, Miss. -- Insurance companies must cover damage
from a hurricane's wind even if the home is later inundated by storm
surge, the Mississippi Supreme Court ruled today in a case that a
couple filed after Hurricane Katrina.

In its 36-page unanimous
ruling, Justice Michael Randolph said storm damage can be excluded from
coverage by language in insurer's homeowner policies when it is caused
by a combination of wind and water acting together.

But the court
said that the exclusion wouldn't apply in the case that a Long Beach
couple, Margaret and Magruder Corban, filed against United Services
Automobile Association if it could be determined that wind damage
happened first.

The Supreme Court said a jury must decide whether damage to the Corbans' home was caused by wind or water.

Lawyers on both sides said they were pleased.

"There's
no question that the decision is a victory for Mississippi homeowners,"
said Christopher Van Cleave, a lawyer for the Corbans. "That doesn't
mean there aren't still battles to be fought."

Paul Berry, a
spokesman for San Antonio-based USAA, said the court "confirmed USAA's
approach to handling Katrina claims in Mississippi was correct."

"Although
other insurers may have taken different approaches, USAA has always
paid damage caused solely by wind," he said. "We're also pleased that
the court confirmed USAA's position, and decades of insurance law, that
damage caused by storm surge is not covered."

Some of the most
contentious insurance lawsuits spawned by Katrina dealt with properties
that were reduced to slabs, making it difficult to determine if wind or
water was responsible.

Insurance companies say their homeowner
policies cover damage by a hurricane's wind but not its rising water,
including wind-driven storm surge. Insurers also have maintained that
damage from a combination of wind and flood water can be excluded from
coverage by "anti-concurrent cause" language in their policies.

In
a case against State Farm Fire and Casualty Co. after Katrina, U.S.
District Judge L.T. Senter Jr. in Gulfport, Miss., ruled that this
clause is ambiguous and couldn't be enforced. In 2007, however, the 5th
U.S. Circuit Court of Appeals in New Orleans reversed Senter's ruling
and upheld the policy language in that case.

Joseph Lavitt, a
Berkeley Law School professor who teaches insurance law, said the
Supreme Court disagreed with part of the 5th Circuit's ruling but
didn't address whether insurers are liable for damage "when either the
wind or the water could have caused the loss without the other and they
acted at the same time."

"The Corbans' battle is far from over. Either party may yet prevail under today's ruling," he said.